A sign is displayed above a Kohl’s store in Chicago on March 1, 2023.
Scott Olson | Getty Images
Kohl’s shares climbed more than 20% on Wednesday after the retailer topped Wall Street’s second-quarter earnings and revenue expectations, even as its sales declined and it looks for a new CEO.
The Wisconsin-based department store narrowed its full-year sales guidance to reflect the higher part of its previous range. It said it now expects net sales to decline by between 5% and 6%. It had previously anticipated sales would fall 5% to 7%.
It also revised its full-year earnings per share guidance. Kohl’s said it expects earnings to be in the range of 50 cents to 80 cents per share adjusted. It was unclear how that compared to a previous outlook of 10 cents to 60 cents per share, which was not adjusted.
Here’s how the retailer did for the three-month period that ended August 2 compared with what Wall Street was expecting, based on a survey of analysts by LSEG:
- Earnings per share: 56 cents adjusted vs. 29 cents expected
- Revenue: $3.35 billion vs. $3.32 billion expected
Kohl’s second-quarter net income was $153 million, or $1.35 per share, compared to $66 million, or 59 cents per share, in the year-ago period. Net sales dropped from $3.53 billion in the year-ago quarter.
Kohl’s shares and sales have both been slumping — and the company’s leadership turmoil has tripped up its turnaround. Annual revenue has declined three years in a row. Its market value, which was just under $7 billion at the end of 2021, has fallen to roughly $1.5 billion. And the retailer has had three chief executives in as many years.
The company’s leadership changes began in late 2022 when Kohl’s CEO Michelle Gass left to become president and eventual CEO of Levi Strauss. Tom Kingsbury, a member of Kohl’s board and the former CEO of Burlington Stores, succeeded Gass. In November, Kohl’s said Kingsbury would step down after two years in the role and named Ashley Buchanan, the then-CEO of Michaels and a veteran of Walmart and Sam’s Club, as his successor.
Less than four months after he started as CEO, Kohl’s fired Buchanan after an investigation found he pushed for deals with a vendor owned by his girlfriend.
Kohl’s named Michael Bender, a member of Kohl’s board since 2019, as its interim CEO.
There have been signs of potential financial concerns, too. Kohl’s recently changed its payment terms with vendors, a move that retailers typically make to delay payments for longer periods and conserve cash.
In a statement, Kohl’s did not specify the changes, but said the company “regularly reviews our work to ensure we are operating as effectively and efficiently as possible.” It said it notified some of its vendors about the updated payment terms in March.
Yet Interim CEO Michael Bender said Wednesday in a news release that the fiscal second quarter’s results are “a testament to the progress we are making against our 2025 initiatives.” He said the retailer reduced its inventory, lowered expenses and gained better traction with customers.
Inventory at the end of the quarter was $3 billion, a 5% drop from the previous year.
To turn around sales, Kohl’s has been expanding departments including petites and fine jewelry, focusing on carrying more exclusive merchandise and overhauling promotions so that its discounts apply to more of its brands, CFO Jill Timm said on the company’s earnings call in May. It’s also added Sephora shops to all of its stores.
Kohl’s continued to post sales declines in the second quarter. Comparable sales decreased 4.2% compared to the year-ago quarter. The industry metric takes out one-time factors like store openings and closures.
— CNBC’s Courtney Reagan contributed to this report.
